Test Your Forex IQ

The following questions test the knowledge you've acquired by reading this book. You are able to take this quiz, place your responses, and find the answers, as well as new questions, at www.learn4x.com/forex IQ. E-mail Abe Cofnas at [email protected] with any questions you may have. Good luck!

1. What is the index that tracks U.S. dollar as an instrument for trading?

2. Which currency pairs are closely related to movements in gold, and which commodities are closely related to movements in the U.S. dollar?

3. Can you name the heads of the world's key central banks?

4. Which time interval is the best for entering a trade?

5. What is the technical basis for locating a stop loss?

6. What are the four strategies for trading a sideways pattern?

7. What information does a candlestick pattern provide that is not in a bar chart?

8. How do you measure sentiment in forex?

9. What is the best time of the day to trade?

10. When is countertrend trading less risky?

11. Which Fibonacci level is the most important?

12. What is the most important report that affects trading the yen, and when does it come out?

13. When the Federal Reserve Open Market Committee meets, what does it decide?

14. What is the name of the Chinese currency?

15. What is the gross national product of the United States versus Europe versus Japan?

16. What is the current interest rate difference between the 10-year U.S. Treasury note and the 3-month Treasury note?

17. Which currency pair allows you to trade the British pound against the euro?

18. When trading forex, what is the cost of the trade when there is no commission?

19. What are the two basic trading strategies for buying or selling that apply to any time frame?

20. If forex prices surge or plunge in response to news, how long should you wait to enter a trade?

21. What's the major problem with using moving averages?

22. What is the average duration of a profitable trade generating 20 pips?

23. When you see a parabolic pattern, what does it predict about the imminent movement of the market?

24. What is the most important fundamental piece of information to track before you decide to trade a currency pair?

25. How do you obtain free and professional advice?

26. How is a cross-pair different than the majors?

27. What pattern always precedes a break of support or resistance?

28. What is the definition of a "false" breakout?

29. What is the best way to spot a trend reversal?

30. If oil prices surge, which currency pair is the most affected?

31. If the Chinese economy slows down or enters a "hard landing," which currency pair is the most affected?

32. Which indicator compares the performance of two different trading systems?

33. Which indicator effectively confirms a reversal?

34. What pattern indicates volatility exhaustion?

35. Which economic calendar release is the most important?

36. How do G7 and G20 meetings affect your forex trading?

37. If gold goes into a downtrend, how do you use gold patterns to determine which currency pair to buy?

38. Which key moving average period should be watched to indicate a trend reversal?

39. When are technical indicators totally useless in determining your next trade?

40. If you are looking at three different time frames, which ones should they be?

41. Which pattern is almost always a reliable predictor of the next move in a currency?

42. Which indicator is the most leading regarding price direction?

43. Which six currencies comprise the U.S. Dollar Index?

44. The index that shows a currency's strength in terms of the country's trading relationship is called .

45. What is the formula for pivot points?

46. Which chart type leaves out time and volume?

47. Which pattern is usually a prelude to a breakout?

48. Name an indicator that shows volatility besides Bollinger bands.

49. The Chinese currency is called the renminbi yuan. What is its value against the U.S. dollar?

50. A trader is losing 70 percent of his trades but claims he is as good as a trader having a win-loss ratio of 60 percent winners. What are their comparable win-loss ratios?

51. If an economic data release is coming out on the British economy and a trader wants to trade it both ways, he will buy the GBPUSD and what other pair?

52. What economic data release report is the most important one issued by the Bank of Japan?

53. What report provides data on foreign owners of U.S. Treasury securities?

54. Who is Japan's biggest trading partner?

55. What is the next number of the following Fibonacci sequence: 0, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233,_.

56. What is the ratio between any two Fibonacci numbers?

57. In a recent equity market sell-off, the Dow Jones Index went down, the dollar against the yen fell sharply, and gold fell also. Why?

58. Regarding currencies, what futures industry report provides a clue to where the smart money is?

59. If you wanted to have a 99 percent confidence that the price is between two Bollinger bands, how many standard deviations would it be set at?

60. If the USDX broke support and the trade-weighted USDX did not, which would you use to put on your next trade?

61. What is the difference between a slow stochastic and a fast stochastic?

62. Which is a more aggressive trade: (a) selling before support, anticipating a move down; or (b) selling on the break of support?

63. Which developed country (not third world) has the highest interest rates in the world?

64. If the EURUSD is priced at 1.3150 and a European goes to Disney world in Orlando, how many dollars will he be able to get (assuming no exchange costs)?

65. What does repatriation refer to within the context of the Japanese yen?

66. What technical indicators are leading?

67. If housing starts in the United States showed a surprise increase, what would you expect the EURUSD to do in reaction to this release?

68. If China unexpectedly increased interest rates, which direction would you expect the USDJPY to go?

69. If a trader is using two moving averages, the Simple MA 21 and the simple MA 8, and the SMA 8 rises above the SMA21, is this a signal to go long?

70. If a currency pair closes above the 38.2 percent day fib line, is it more likely to reach the next fib line at 50 percent?

71. If a currency pair reaches the 20-period moving average in the middle of a Bollinger band, and crosses it, is this a signal to sell?

72. If a trader missed a news release and saw the price surge, how many minutes should he wait to enter a trade?

73. If the amount of foreign owners of U.S. Treasury securities significantly declined, what would likely happen to U.S. interest rates?

74. What happens to the value of the average true range when one moves from a 5-minute chart to a 30-minute chart?

75. If the United States increases the rate of exports, what happens to the trade deficit?

76. If a triangle formation forms and it is equilateral, in which direction is the price most likely to break out?

77. If a price is probing a four-hour resistance, does this represent stronger resistance than a price probing a five-minute resistance?

78. If a doji pattern appears at the top of a Bollinger band, is it indicating a reversal?

79. Which has a greater interest rate differential the USCHF pair or the EURCHF pair?

80. If a trader was able to save one pip per trade on the spread and traded five times a day for 100 days, what would the value of the saving be if he were trading the AUDUSD only?

81. Which equity market opens up first, the Tokyo or London?

82. When it is 8:30 A.M. Eastern Standard Time and the nonfarm payroll report is released, what time is it Greenwich Mean Time?

83. Joe put on a sell limit order for the GBPUSD at 1.9205 and he saw on his chart that the price hit limit. He didn't get it, though. Did the forex firm make a mistake?

84. What is slippage?

85. When three or more multiple moving averages compress in a pancake pattern, what does this signify?

86. The default setting on MACD is 12, 26, 9. What do these numbers represent?

87. John came up with his own moving average crossover of 95 and five simple moving averages. He decided to back test it over three years and the result came out quite positive. What is wrong with his approach?

88. Bob signed up to get a news trading report that provides a few seconds' more release of the embargoed economic data on a news release. Will this make a difference in the trading results?

89. Why is holding a position over a weekend very risky?

90. If the yen suddenly sells off and gets weaker, what is gold likely to do and why?

91. A change in the demand for copper affects which currency the most?

92. The ZEW sentiment indicator represents what kind of sentiment?

93. If the Indian rupee starts floating, what is the major risk to their currency reserves?

94. If China increases its value of the renminbi, what would the impact be on Wal-Mart shares?

95. If the EURJPY reaches historical highs, who would be more pleased, European car manufacturers or Japanese car manufacturers?

96. New Zealand has had the second highest interest rates in the world, at 7.25 percent. If they lowered the rate, what would happen to the yen?

97. Jim is trading at an account that is offering 200-to-1 leverage. He has $1000 in his account. How much can he trade with this 1000 without getting a margin call?

98. If crude oil prices collapsed, which country would benefit the most?

99. Tom went long the EURUSD at 1.305 and the price moved to 1.3015. Where would the break even point be if Tom wanted to put a stop there?

100. If the setting for a renko chart was moved from one pips to two pips, and the action was very choppy, what would be the result on the chart?


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